Point & CounterPoint: Raise minimum wage, leave it alone or eliminate it altogether?

Michael O'Loughlin: Increase the minimum wage to fix problems

The federal minimum wage should be raised significantly above its present $7.25 per hour to $15 per hour, the wage rate for which fast food workers have been striking in recent months. This increase would address some chronic problems associated with modern capitalism.

Left to its own dynamic, capitalism generates a whole class of low wage jobs, creating poverty wage jobs where a 40-hour work week still brings home a poverty level income, in essence, wage slaves, barely making ends meet.

The minimum wage law addresses this social injustice by creating a wage and income floor below which no American should have to work. Just as no one has the right to hold slaves as workers, no employer should have the right to employ workers at subsistence level wages. Just as the Emancipation Proclamation of 1863 was a major step forward for the abolition of slave labor, the Fair Labor Standards Act of 1938 was a major step away from "wage slave" labor. In addition to establishing a 40-hour work week and an eight hour day, this law established the principle of a minimum wage whose intention was to stop exploitive labor conditions. Congress should act simply to raise that floor substantially today.

An adjusted federal wage could help address the problem of sluggish aggregate demand in the economy. Higher-paid workers spend higher percentages of their incomes in the marketplace and will spark higher production, higher employment and higher tax revenue to fund important government services.

Finally, a higher minimum wage, approaching a genuine "living wage" would also help curb the trend towards ever greater income and wealth inequality which has returned our society to the robber baron era of the early 20th century.

If past is prologue, increases in the minimum wage tend to push up wages and incomes of other working class and middle class workers. Consequently, middle class workers along with their working class citizens will be able to demand and obtain higher incomes and take home in the aggregate a greater share of national income.

In short, social justice and reasoned economics go hand in hand with an increase in the minimum wage. We will be a better democracy for it.

Michael O'Loughlin is a professor of political science at Salisbury University.

E. Tylor Claggett: Increasing the minimum wage not such a good idea

Every few years, the debate on "should there be a minimum wage at all and, if so, should we raise it," surfaces. Recently, this debate has reappeared in the popular media. At first glance, it seems like a humane thing to do. There is no doubt many Americans and their families live below the poverty level. But, further examination suggests some very inhumane consequences.

The classic economic argument is that a wage rate increase above the market clearing price creates significant unemployment. This increase comes from two sources. Employers will forgo hiring some workers because their contributions are less than what it costs to employ them, and more people will look for work because of the higher wage rate. This argument applies to all wage levels. An increase in the minimum pushes up all wages.

Beyond this academic argument, there are common-sense reasons not to increase the minimum wage - or perhaps to do away with it altogether. Many teenagers learn good work habits and skills by taking after-school jobs. If the minimum wage is too high, employers cannot afford to offer such opportunities to young people; a valuable training avenue is lost to society.

More to the point, many workers today, especially those working at the minimum wage, are easily replaced by automation. This is becoming more and more prevalent as technology advances - for example, self-checkout lines at grocery stores. Recently, more than one fast food chain has stated that rising labor costs would hasten the utilization of automation in their restaurants.

I can easily envision fast food restaurants consisting of many machines dispensing menu items when patrons swipe debit/credit cards or use cash. The only workers would be those in the kitchens supplying items to the machines.

How many workers who serve customers would lose their jobs if such establishments invested in automated dispensing equipment? Such investments would be much more attractive if the minimum wage were increased. The increased number of technicians needed to manufacture and maintain these machines would likely be a mere fraction of the displaced servers. The same scenario applies to many other industries.

Finally, research shows that most viable workers stay at the minimum wage rate a only short time, particularly if their employers recognize the real value they deliver to the enterprise.

What a pity it would be if these workers were never able to get their start.

E. Tylor Claggett is a professor of finance at the Perdue School of Business at Salisbury University.

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Point & CounterPoint: Raise minimum wage, leave it alone or eliminate it altogether?

The federal minimum wage should be raised significantly above its present $7.25 per hour to $15 per hour, the wage rate for which fast food workers have been striking in recent months.